Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased 5.86% on a weekly basis, falling below the $10-billion mark, according to data released by the central bank on Thursday.
Last week, foreign exchange reserves increased due to official inflows. However, this week reserves were back to the declining trend, sparking concern over Pakistan’s ability to meet future payment obligations and manage a bulging current account deficit.
On June 22, foreign currency reserves held by the central bank were recorded at $9,662.5 million, down $601.8 million or 5.86% compared with $10,264.3 million in the previous week.
The decrease has been attributed to external debt servicing and other official payments.
Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $16,243.9 million. Net reserves held by banks amounted to $6,581.4 million.
In April, the SBP’s reserves increased $593 million due to official inflows. Pakistan also raised $2.5 billion in November 2017 by floating dollar-denominated bonds in the international market in a bid to shore up official reserves.
A few months ago, the foreign currency reserves surged due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank. The SBP also received $350 million under the Coalition Support Fund (CSF).
In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.